Student housing manager Deutsche Real Estate Funds (DREF) has raised €44m ($49.7m) through a bond issue.

DREF, in which Internos Global Investors and family office The Somerston Group jointly hold a 27% stake, said the five-year bond was subscribed to by major German institutional investors.

“Immense interest” from German institutional investors in student housing means DREF is now planning a private placement in the coming months, it said.

The latest bond offers an annual 4.675% coupon.

The firm has also taken a €50m loan from an international bank for its development pipeline.

Institutional fund manager Internos and Somerston took a 27.5% stake in DREF in February this yearThe joint stake put the companies in partnership with DREF’s majority shareholder, the Bauer Group.

“The German student housing market needs private investments,” said Felix Bauer, CEO of DREF. “The supply gap and refurbishment bottleneck of student accommodation cannot be resolved with public funding alone.”

Proceeds from the issue will be used to buy and refurbish five student residences in Berlin, Bremen, Kiel and Stuttgart.

DREF said around 1,000 students will prospectively be able to move into the refurbished units by the start of the 2015 winter semester.